Most of us are too young to remember the Great Depression let alone know or remember the causes. Beware of those who say it can’t happen, again.
One of the most interesting of philosophical debates has been whether or not history repeats itself. A fair conclusion to this debate is that if the circumstances that led to a specific result due to the economic, social and political circumstances of one era align themselves in a very similar way in a subsequent time or era, you may very well wind up with the same or similar results as to what happened before.
John Kenneth Galbraith in his book, “The Great Crash,” gives us reason to pause and think when he analyzes why the Great Depression lasted as long as it did. His number 1 reason was the following: ” The bad distribution of income. In 1929, the rich were indubitably rich. The figures are not entirely satisfactory but it seems certain that the 5 percent of the population with the highest incomes in that year received approximately one-third of all personal income. The proportion of personal income received in the form of interest, dividends, and rent-the income, broadly speaking, of the well-to-do-was about twice as great as in the years following the Second World War.
This highly unequal income distribution meant that the economy was dependent on a high level of investment or a high level of luxury consumer spending or both. The rich cannot buy great quantities of bread. If they are to dispose of what they receive it must be on luxuries or by way of investment in new plants and new projects. Both investment and luxury spending are subject, inevitably, to more erratic influences and to wider fluctuations than the bread and rent outlays of the $25-a-week workman.”
Today, we see an even greater concentration of wealth. In an article in the Christian Science Monitor, dated, January 5, 2014, sounded a similar warning regarding our current income disparity in America. “Artificial money, corporate K street, and Wall Street interests are profoundly one world for the rich and an entirely different world for the working class. It can’t go on like this, either from the standpoint of the health of the capitalist system itself or the health of the individual and the family.” “Consumption won’t be able to be supported.” He went on further to say that 95% of income gains have gone to the top 1%.
This is a warning that we as a nation should take seriously. After all, it is quite logical that for the middle class as wages have gone down visa vie the rate of inflation since the 1970’s there will be a tipping point that will be reached whereby even the Wal-Mart economy will be too expensive for most Americans. Only economic disaster can result if too few of us can afford to buy the goods that are produced.
Corporate America is recording record profits, and CEO’s are benefitting with amazing financial rewards. But and this is a big but, they are not using their record profits to buy new equipment nor are they hiring people or raising the wages of the middle class.
This can not continue without history repeating itself. So how do we fix the problem? One would think that the logic of all boats rising being beneficial to the nation would be what we would want as an outcome. The solution is two-fold, raise the minimum wage, and raise the taxes of the wealthy so that we can afford to train Americans for the jobs that will pay higher wages.
Two different amounts have been mentioned regarding what the wage should be, $10.10 per hour and $15 per hour based upon the same criteria as the first amount but adding in an amount based upon the increase of productivity of each worker.
Another idea that we might wish to further investigate is what Japan has codified into law regarding the mathematical ratio that must be maintained between the top earner of a company and how much his or her lowest employee earns.
Some individuals have suggested both raising the maximum income tax to 40% for the wealthy and increasing the capital gains tax to equal the top income tax rate. One should not be frightened by the 40% rate when you consider what the tax rate for the top income earners was during the Roosevelt, Truman, Eisenhower and John F. Kennedy eras.Those were the days when our economy was the strongest and the inequality between the middle class and the wealthiest among us was the smallest.
No one in America should be in poverty if they work full-time. If you take a person who works for $9 an hour and that person works two jobs at $9 per hour for 60 hours a week, he or she is still making far too little money to live on.
The revenue increase through increased taxes and the closing of tax loopholes would provide enough money to train people for better paying jobs. It would provide enough money to ensure that our infrastructure stays world-class so we can compete with other countries in the global economy. Our primary focus and concern should be about our own people and making sure that Americans have an economic future worthy of a life worth living.
The global economic collapse of 2008 should be a warning of what might happen in the future. The next collapse could very well be much worse. The global security we had in the post World War II era has left us. We need a return to the economic security that we once had and reject the nihilistic individualism that we now see and also reject the idea of returning to the type of Socialism that was so lacking in the understanding of human nature. Ensuring greater fairness and stability is not a bad thing.
If we are not careful, history will repeat itself and we will only have our selfish interest to blame. “Once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilization.” John Maynard Keynes
A true conservative should realize that for us to be able to conserve what is worth saving, one needs to change with the times.
History has rejected a laissez-faire type of economic existence just as it has rejected the failed Communist system. We can not go
back in time to a gilded age. It was only gilded for a very few.
We must move forward and regulate the greed that capitalism seems to encourage and help to make sure that each person has the opportunity to maximize his or her own ability and live a life worth living. For our own interests as a nation we must work together to reduce the huge income inequality that we currently have and seek greater equality for all.